Land intended for Costco changes hands again

The Ukiah City Council Wednesday will be voting on at least two items related to the property bought and set aside for a potential Costco store in the Redwood Business Park on Airport Park Boulevard.

The first item is on the Consent Calendar and involves the City of Ukiah giving back the 18 acres the former Ukiah Redevelopment Agency (URA) transferred to the city in early 2011 when it became clear that the state's redevelopment agencies might be ordered to dissolve.

According to the staff report prepared for the Dec. 5 meeting, "the State Controller has issued a letter directing the city to reconvey any such assets to the (URA's Successor Agency, which is the City Council)."

"We're taking all the steps prescribed by the law," said City Manager Jane Chambers Friday, explaining that city staff is still completing its "due diligence review of all of the (URA's) available assets" in order to get a "finding of completion for our agency. Then we may be able to move forward and use the (money the city borrowed last year) to pay for the traffic mitigations."

Costco has applied for the permits to build a store and paid for an Environmental Impact Report that is still being prepared. As part of its negotiations with the city, the company requested traffic mitigation measures be completed near the Redwood Business Park.

The city sold several millions of dollars worth of redevelopment bonds last year and is still hoping to be able to use some of the proceeds for the traffic improvements, which include a new configuration of the off-ramps from Highway 101 to Talmage Road.

According to the staff report, a bill amending the legislation that called for the dissolution of redevelopment agencies allows any property "owned by the successor agency to be used for redevelopment purposes under a long-range property management plan approved by the successor agency's Oversight Board and the state's Department of Finance."

By transferring the property, the report states, the city will be "complying with state law and ... facilitating a positive Due Diligence Review of the former (URA) ... and creating an opportunity to use the property to complete a longstanding priority redevelopment project."

Another item related to the property intended for Costco will be addressed by the council, acting as the URA's successor agency, and involves the agreement between the city's former URA and the Redwood Business Park (RBP) when the redevelopment agency bought the property in 2009.

City Attorney David Rapport said "there was a provision in the agreement that said under certain circumstances, the RBP would have an option to repurchase the property," and a letter sent to Rapport earlier this month by Gary Akerstrom states he "believes he does have a right" to buy back the property," but "the city disagrees."

According to the staff report prepared for the meeting, the RBP could buy back the property "if within three years .. the city had not accepted an application to develop a retail/commercial development of not less than 120,000 square feet to be located on all or any portion of the property."

Rapport said Akerstrom "gave notice that he intends to exercise the option (to buy the property), but he doesn't want to exercise it if Costco buys the property."

Rapport said Costco has applied to build on the land and intends to buy it, "but they won't buy the property if they can't get approval to build their store on it. So if at some point it becomes clear Costco won't be buying the property," a tolling agreement keeps the option open for arbitration to resolve the dispute open.

"There will be no time limitation on when either party can seek arbitration," Rapport said.

The tolling agreement and the land transfer will be considered by the council at its meeting Wednesday, which begins at 6 p.m. in the council chambers at 300 Seminary Avenue.

Justine Frederiksen can be reached at udjjf@pacific.net, on Twitter @JustFrederiksen or at 468-3521.